While you cogently outlined a case for the source of the demise of Canadian VC, why do we need protectionist policy to succeed in the first place?
From the entrepreneur's perspective, I see a parallel with SR&ED. Most early-stage Canadian companies leverage SR&ED to keep their development costs down. It leads st…
While you cogently outlined a case for the source of the demise of Canadian VC, why do we need protectionist policy to succeed in the first place?
From the entrepreneur's perspective, I see a parallel with SR&ED. Most early-stage Canadian companies leverage SR&ED to keep their development costs down. It leads startups to over-index on the subsidized resources - development - and under-index in the unsubsidized ones - sales and marketing. It's not a coincidence that Canadian companies are known for being great in product and poor in sales and marketing: we don't invest as much in building the sales engine as we do the product or, even more so, the development engine.
Personally, I would prefer to see policy that is not protectionist in nature but rather incentivizes risk-taking behaviour. As Anthony wrote below, there is a risk aversion to Canadian investors that we want to overcome. For example, what if 1) we could use RRSP or TFSA funds to invest in companies; and 2) get a tax incentive to doing so? The BC government provides a tax incentive for BC investors to invest in BC companies and it effectively lowers their cost of capital and encourages their investment in homegrown companies over those from other provinces.
Great history lesson, Matt!
While you cogently outlined a case for the source of the demise of Canadian VC, why do we need protectionist policy to succeed in the first place?
From the entrepreneur's perspective, I see a parallel with SR&ED. Most early-stage Canadian companies leverage SR&ED to keep their development costs down. It leads startups to over-index on the subsidized resources - development - and under-index in the unsubsidized ones - sales and marketing. It's not a coincidence that Canadian companies are known for being great in product and poor in sales and marketing: we don't invest as much in building the sales engine as we do the product or, even more so, the development engine.
Personally, I would prefer to see policy that is not protectionist in nature but rather incentivizes risk-taking behaviour. As Anthony wrote below, there is a risk aversion to Canadian investors that we want to overcome. For example, what if 1) we could use RRSP or TFSA funds to invest in companies; and 2) get a tax incentive to doing so? The BC government provides a tax incentive for BC investors to invest in BC companies and it effectively lowers their cost of capital and encourages their investment in homegrown companies over those from other provinces.